Income tax calculator
Do you pay tax on your pension?
Normally up to 25% of your pension can be paid to you tax free, but the rest is taxed as income. The amount of taxable income you withdraw will be added to any other income you’ve received so far in the year and taxed at your marginal rate. The tax free and taxable portions of these withdrawals will depend on how you decide to access your pension.
This calculator gives you an idea of how much income tax you could pay on a lump sum withdrawal. Simply confirm the amount you get paid before tax (gross annual income), the value you’d like to withdraw, and whether you’d like to take a drawdown or a lump sum payment.
How are pension withdrawals taxed?
Download our factsheet to find out:
- How emergency tax works
- How tax could be deducted
- How to claim back overpaid tax
Your details
25% of a lump sum taken from a pension not already in drawdown will normally be tax free and the rest taxable.
100% of a lump sum taken from a drawdown plan will be taxable.
For more details of the Scottish rate of Income Tax please see GOV.UK
Important information:
In calculating the tax, it uses the standard personal allowance and respective income tax bands for a whole tax year. However, the full personal allowance and respective tax bands may not be available at the time a withdrawal is made. For example, in the first month of the tax year, April, only 1/12th of the personal allowance and tax bands are available, regardless of the amount of the lump sum. This may result in a disproportionate amount of tax being deducted which can be reclaimed from HM Revenue & Customs directly.
This calculator only provides you with an indication of the tax you may have to pay based on rates and allowances which apply to the 2024/25 tax year. It takes into account income related personal allowances, but otherwise assumes a standard £12,570 personal allowance. It also assumes all income is employment or pension income. The actual tax deducted from any payment will depend on the tax code specified by HM Revenue & Customs.
The calculations assume that 25% of any lump sum from a non-drawdown pension is available tax free. If you don’t have enough lump sum and lump sum and death benefit allowances remaining, this percentage will be lower. In some circumstances, you may not be eligible for certain types of lump sum. The calculator does not confirm that such a lump sum is available to you, nor does it consider any implications of taking this lump sum, for example any impact on capital gains tax, inheritance tax or on any means tested benefits. If you're unsure, please seek professional advice.
If you are yet to take a payment from your pension you may find the first payment has tax deducted using an emergency tax code. Use our emergency tax calculator to see how much tax might be deducted from your pension withdrawals under emergency rate tax.
Money in a pension cannot normally be accessed until age 55 (rising to 57 from 2028). This isn’t personal advice. Please seek advice if you’re unsure about the right course of action for your circumstances. Drawdown is a more complex option than an annuity. What you do with your pension is an important decision. Make sure you understand your options and check they are suitable for your circumstances. The Government's free Pension Wise service can help. It provides impartial guidance online or by phone - more on Pension Wise.